Do High Oil Prices Matter? Evidence on the Mobility Behavior of German Households

27 Pages Posted: 22 Oct 2008

See all articles by Manuel Frondel

Manuel Frondel

RWI Leibniz Institute for Economic Research ; Ruhr University Bochum (RUB)

Colin Vance

Rheinisch-Westfälisches Institut für Wirtschaftsforschung (RWI)

Date Written: October 1, 2008

Abstract

Focusing on travel survey data from Germany, this paper investigates the determinants of automobile travel, with the specific aim of quantifying the effects of fuel prices and fuel economy. The analysis is predicated on the notion that car mileage is a two-stage decision process, comprising the discrete choice of whether to own a car and the continuous choice of distance traveled. To capture this process, we employ censored regression models consisting of Probit and OLS estimators, which allows us to gauge the extent to which sample selectivity may bias the results. Our elasticity estimates indicate a significant positive association between increased fuel economy and increased driving, and a significantly negative fuel-price elasticity, which ranges between -35% and -41%. Taken together, these results suggest that fuel taxes are likely to be a more effective policy measure in reducing emissions than fuel-efficiency standards.

Keywords: Automobile travel, rebound effect, two-part model

JEL Classification: D13, Q41

Suggested Citation

Frondel, Manuel and Vance, Colin, Do High Oil Prices Matter? Evidence on the Mobility Behavior of German Households (October 1, 2008). Ruhr Economic Paper No. 72. Available at SSRN: https://ssrn.com/abstract=1287550 or http://dx.doi.org/10.2139/ssrn.1287550

Manuel Frondel (Contact Author)

RWI Leibniz Institute for Economic Research ( email )

Hohenzollernstr. 1-3
45128 Essen
Germany

Ruhr University Bochum (RUB) ( email )

Universitätsstraße 150
Bochum, NRW 44780
Germany

Colin Vance

Rheinisch-Westfälisches Institut für Wirtschaftsforschung (RWI) ( email )

Hohenzollernstr. 1-3
Essen, 45128
Germany
0049-201-8149-237 (Phone)

HOME PAGE: http://www.rwi-essen.de

Here is the Coronavirus
related research on SSRN

Paper statistics

Downloads
43
Abstract Views
614
PlumX Metrics